Donations Could Taint Probe on Capitol Hill

None of the key congressional committees investigating Enron and its former auditor, Andersen, could muster a majority at their hearings, if campaign contributions from the powerful companies disqualified members.

And most of their chairmen couldn’t participate.

So great was the largess Enron and Andersen spread across party lines on Capitol Hill during the last decade that 51 of the 56 members of the House Energy and Commerce Committee, which is taking the lead investigative role, have received contributions.

Together, the two companies’ political action committees and employees contributed more than $400,000 to the committee’s members since 1990, Federal Election Commission records show.

Forty-nine of the 70 members of the House Financial Services Committee, which held the first Enron hearings last month, have taken in a total of $300,000 in contributions from Enron and Andersen in the last decade.

And two-thirds of the Senate committee that will open hearings into Enron and Andersen next week shared in a total of more than $70,000 in contributions from the targets of their investigation--including the committee’s chairman, Joseph I. Lieberman (D-Conn.).

Enron’s influence on the Hill extended beyond the contributions. Several lawmakers or their wives owned stock in Enron or in mutual funds that were heavily invested in Enron.

“It seems everybody on Capitol Hill got money from somebody--either Andersen or Enron. So everyone’s hands are dirty,” said Holly Bailey, a researcher for the Center for Responsive Politics, a government watchdog group.

As the effects of the Enron affair spread rapidly this week across both parties, politicians were scrambling either to return contributions or to donate them to former Enron employees who lost their life savings in near-worthless company stock.

Andersen’s political action committee donated nearly $2 million in the last four years--much of it to specific legislators and senators on the committees that oversee the financial industry, according to Federal Election Commission records. Enron contributed significantly more during that period but favored “soft-money” donations to political parties and their committees.

Rep. Bernard Sanders, a Vermont independent, was among the handful of members of Congress at the Dec. 12 Enron hearing who had not taken money from either Enron or Andersen. He used the occasion to argue that the committee’s investigation should be expanded to include not just Andersen but campaign finance reform.

“During the last two years, Enron has spent $4 million lobbying Congress and the White House,” he said. “Now what did Enron get in return for the campaign contributions from the federal government? . . . There is no question that Enron, through their political contributions and influence, had an enormous impact on energy policy and the way this government does business. That’s wrong. It’s got to be changed.”

A spokeswoman for the House Financial Services Committee, Peggy Peterson, said the contributions will have no effect on its investigation.

“We’re going to address this in a thorough and comprehensive way,” she said.

Rep. W.J. “Billy” Tauzin (R-La.) ranks as the top House recipient of Andersen’s contributions--$47,000 since 1989, according to a compilation by the Center for Responsive Politics. FEC records show that more than half of that came in the last four years. Tauzin got an additional $6,400 from Enron over the 10-year period.

Tauzin, who chairs the Energy and Commerce Committee, has been a staunch advocate for Andersen, until last year known as Arthur Andersen. He has become one of the most outspoken investigators of Enron and Andersen since Enron’s Dec. 2 bankruptcy filing.

“It doesn’t matter if they give us a million bucks, it’s not going to cut either of these companies any slack,” Tauzin spokesman Ken Johnson said Thursday. “If they thought this would buy them influence, they’ve blown their money. Both Enron and Arthur Andersen are in line for a good old-fashioned spanking.”

Fueling some skepticism is the recent track record of Tauzin’s committee. As recently as 2000, Tauzin and other committee members who received Andersen contributions successfully fought back strict new regulations proposed by then-Securities and Exchange Commission Chairman Arthur Levitt.

Andersen and its congressional advocates staunchly opposed the new SEC rules, which would have barred accounting firms from doing both audit and consultancy work for the same company--a dual role Andersen played at Enron and one many critics have cited as a conflict of interest that contributed to the company’s collapse. That year, Andersen reportedly received $52 million in combined fees from Enron.

Johnson said Levitt’s measure was premature.

“Now we know there is a problem and now we’re prepared to fix it,” he said. “Changes are coming, and we’re going to support them.”

Although some members of Congress have pledged to donate their latest Enron contributions to the company’s fired employees or charity, Johnson, speaking for Tauzin, said: “We’re not giving away the contributions nor recusing ourselves from the investigation. To do so would imply we had done something unethical.”

Sen. Phil Gramm is one of the Senate’s largest recipients of Andersen and Enron campaign contributions. His case helps show how deeply the two companies and Congress are intertwined.

The Texas Republican’s wife is an Enron board member who has been served with a subpoena issued by the subcommittee of one of Gramm’s colleagues. Wendy Gramm is one of 51 people served with subpoenas issued Friday by Sen. Carl Levin’s Permanent Subcommittee on Investigations. Wendy Gramm also has been named in lawsuits against Enron alleging she made a large profit on the early sale of her stock.

Sen. Gramm himself got $97,350 in campaign contributions from Enron and an additional $73,850 from Andersen during the last decade. Gramm is the ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, which announced this week that it too is investigating Enron and Andersen.

Gramm spokesman Larry Neal said the senator, who announced his retirement in September, is returning all contributions received for the 2002 elections, including those from Enron and Andersen. Earlier contributions have already been spent, he said.

Asked whether Gramm will recuse himself in future Enron-Andersen hearings, Neal said, “That’s a judgment he’ll have to make when he learns the scope of the hearings.”

Not everybody connected to Enron was a high roller. Rep. Charles A. Gonzalez, also a Texas Democrat, got a mere $500 from Enron and $1,000 from Andersen, but his wife owned Enron stock, which tanked last fall. Gonzalez spokesman Adrian Saenz said the congressman’s wife bought 65 shares of Enron at $64 each in 2000 and sold them in October for $36 a share.

But Saenz added that Gonzalez “is probably in a different position than other members who received much larger contributions or had larger investments in the companies.”

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Times researcher Robert Patrick contributed to this report.